EX-10.38






Exhibit 10.38




FUJIAN PROVINCE PINGNAN COUNTY POWER SUPPLY CO., LTD.




PINGNAN COUNTY YUANPING HYDROELECTRIC CO., LTD.




POWER PURCHASE AND SALE CONTRACT




FOR




TECHNOLOGICAL UPGRADING PROJECT

OF

YUANPING HYDROPOWER STATION




December 2008




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CONTENTS




	 	 	 	 	 
	CHAPTER I DEFINITIONS AND INTERPRETATIONS
	 	 	4	 
	 
	 	 	 	 
	CHAPTER II REPRESENTATIONS BY BOTH PARTIES
	 	 	5	 
	 
	 	 	 	 
	CHAPTER III OBLIGATIONS OF THE PARTIES
	 	 	5	 
	 
	 	 	 	 
	CHAPTER IV METERING OF ELECTRIC POWER
	 	 	7	 
	 
	 	 	 	 
	CHAPTER V ELECTRICITY OUTPUT
	 	 	11	 
	 
	 	 	 	 
	CHAPTER VI SETTLED ELECTRICITY TARIFF
	 	 	11	 
	 
	 	 	 	 
	CHAPTER VII PAYMENT AND SETTLEMENT FOR ELECTRICITY FEES
	 	 	12	 
	 
	 	 	 	 
	CHAPTER VIII FORCE MAJEURE
	 	 	14	 
	 
	 	 	 	 
	CHAPTER IX LIABILITY FOR BREACH OF CONTRACT
	 	 	16	 
	 
	 	 	 	 
	CHAPTER X EFFECTIVENESS AND VALID TERM
	 	 	17	 
	 
	 	 	 	 
	CHAPTER XI APPLICABLE LAW
	 	 	17	 
	 
	 	 	 	 
	CHAPTER XII MODIFICATION, ASSIGNMENT AND TERMINATION OF THIS
CONTRACT
	 	 	18	 
	 
	 	 	 	 
	CHAPTER XIII DISPUTE RESOLUTION
	 	 	19	 
	 
	 	 	 	 
	CHAPTER XIV MISCELLANEOUS
	 	 	19	 
	 
	 	 	 	 
	APPENDIX I: DIAGRAM FOR METERING POINTS
	 	 	23	 
	 
	 	 	 	 
	APPENDIX II: DIAGRAM FOR CONNECTION AND LIABILITY DEMARCATION OF
JIAYANG TRANSFORMER 
ON 110KV LIJIA LINE
	 	 	24	 







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Power Purchase and Sale Contract for Technological Upgrading Project of Yuanping Hydropower Station




POWER PURCHASE AND SALE CONTRACT




This Power Purchase and Sale Contract (hereinafter referred to as this “Contract”) is executed by
and between the following two Parties:



Party A (hereinafter referred to as the “Power Purchaser”): Fujian Province Pingnan
County Power Supply Co., Ltd., a limited liability company registered and established with
the Administration for Industry and Commerce of Pingnan County;



Legal Address: No. 7, Huating Road, Gufeng Town, Pingnan County



Zip Code: 352300



Legal Representative: Wei Nai Sheng



Party B (hereinafter referred to as the “Power Seller”): Pingnan County Yuanping
Hydroelectric Co., Ltd., a joint-stock enterprise registered and established with the
Administration for Industry and Commerce of Ningde City;




Legal Address: Yuanping Village, Shoushan Township, Pingnan County



Zip Code: 352300



Legal Representative: John D. Kuhns.



WHEREAS:





	(1)	 	The Power Seller is currently owning, managing, operating and maintaining the Technological
Upgrading Project of Yuanping Hydropower Station (hereinafter referred to as the “Hydropower
Station”) with the total installed capacity of 16 MW in Yuanping Village, Shoushan Township,
Pingnan County.






	(2)	 	Having been approved by the document with the number of Ping Jing Mao [2005] No. 46 and
confirmed by the document with the number of (Min) Jing Mao Fa Zhan [2006] No. 006, the
Hydropower Station will be connected to the power grid of Pingnan County








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Power Purchase and Sale Contract for Technological Upgrading Project of Yuanping Hydropower Station





	 	 	according to the Grid Connection and Dispatching Agreement and operated on the power grid
operated and managed by the Power Purchaser.





After friendly consultations, on the principles of equality, free will and good faith, both
Parties have reached this Contract in accordance with the Contract Law of the People’s Republic of
China, the Electric Power Law of the People’s Republic of China, the Administration Regulations on
the Dispatching of Power Grids and other relevant laws and regulations of the People’s Republic of
China.



CHAPTER I DEFINITIONS AND INTERPRETATIONS





	1.1	 	Unless otherwise required by the context, the following terms used in this Contract





shall have the meanings set forth as follows:




	(1)	 	“Hydropower Station” refers to the power generation facilities with the total installed
capacity of 16 MW (one (1) set of generator unit with the capacity of 16 MW), which is owned,
managed, operated and maintained by the Power Seller and located in Yuanping Village, Shoushan
Township, Pingnan County.






	(2)	 	“Grid Connection and Dispatching Agreement” refers to the agreement entered into by the
Power Purchaser and Power Seller concerning the grid connection and the dispatching
arrangements of the Hydropower Station.






	1.2	 	Interpretations






	1.2.1	 	All headings hereof are only for the convenience of reading and shall not be considered as
part of this Contract or affect the interpretation of this Contract in any way.






	1.2.2	 	This Contract shall have binding force on the assignees of any Party.






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Power Purchase and Sale Contract for Technological Upgrading Project of Yuanping Hydropower Station




CHAPTER II REPRESENTATIONS BY BOTH PARTIES




Each Party hereby represents to the other Party that:




	2.1	 	It is an enterprise that has been duly established and validly and legally in existence in
accordance with law, and has the full right to enter into and the ability to perform this
Contract.






	2.2	 	All procedures required for entering into and performing this Contract (including procuring
requisite governmental approvals and relevant licenses and permits, etc.) have been
accomplished and are legal and valid.






	2.3	 	Upon entering into this Contract, no judgments, verdicts, awards or specific administrative
acts have been carried out by any courts, arbitration institutes or administrative organs that
will have material adverse effect on its performance of this Contract.






	2.4	 	All internal authorization procedures required for executing this Contract have been
accomplished and this Contract is signed by its legal representative or authorized proxy. This
Contract shall have binding force on both Parties hereto after it comes into effect.





CHAPTER III OBLIGATIONS OF THE PARTIES





	3.1	 	The Power Purchaser’s obligations shall include the following:






	3.1.1	 	To purchase the electric power generated by the generator units of Hydropower Station of the
Power Seller in accordance with the provisions of this Contract.






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Power Purchase and Sale Contract for Technological Upgrading Project of Yuanping Hydropower Station





	3.1.2	 	To abide by the Grid Connection and Dispatching Agreement entered into by Party A and Party
B, operate and maintain the power transmission and transformation facilities in accordance
with relevant national standards and electric power industry standards, and maintain the
safety, high quality and economic operation of the electric power system.






	3.1.3	 	To dispatch the electric power and disclose information publicly, justly and fairly
according to relevant regulations of the State, and provide information relating to the power
load, reserved capacity and operational conditions of power transmission and transformation
facilities, etc. for the purpose of performing this Contract.






	3.1.4	 	To provide electric power to the Power Seller for restarting the generator units of the
Hydropower Station according to relevant national regulations.






	3.1.5	 	To compensate the Power Seller for the reasonable fees arising from the paid assistant
services provided by the Power Seller upon the request of the Power Purchaser according to
relevant national regulations.






	3.2	 	The Power Seller’s obligations shall include the following:






	3.2.1	 	To sell to the Power Purchaser the electric power that satisfies the national standards and
the electric power industry standards in accordance with the provisions of this Contract.






	3.2.2	 	To abide by the Grid Connection and Dispatching Agreement entered into by Party A and Party
B, comply with the unified dispatching of electric power, operate and maintain the Hydropower
Station according to national standards, the electric power industry standards and the
dispatching codes, ensure the operational abilities of the power generation units satisfy the
technical standards and rules issued by relevant departments of the State, and maintain the
safety, high quality and economic operation




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Power Purchase and Sale Contract for Technological Upgrading Project of Yuanping Hydropower Station





	 	 	of the electric power system.






	3.2.3	 	To provide to the Power Purchaser with the reliability index and the operational conditions
for the units of the Hydropower Station on a monthly basis, provide information concerning the
defects of facilities in a timely fashion, regularly provide the overhaul plan for the units
of the Hydropower Station, and strictly implement the overhaul plan for the generator units of
the Hydropower Station which has been comprehensively arranged and balanced by the Power
Purchaser and determined by the Parties through consultations.






	3.2.4	 	To compensate the Power Purchaser for the reasonable fees arising from the paid assistant
services provided by the Power Purchaser upon its request according to relevant national
regulations.






	3.2.5	 	Not to conduct the business of supplying power directly to the consumers without the
approvals from relevant authorities of the State.





CHAPTER IV METERING OF ELECTRIC POWER





	4.1	 	Gateway Metering Point
	 
	 	 	The gateway metering point shall be installed according to the Supplemental Agreement on the
Gateway Metering Point Installment, Electricity Output Calculation and Line Loss Calculation
for the Openness of the Temporary Integrated Channel of Pingnan Rongping Supply District.
Details please refer to Appendix I.






	4.2	 	Metering Devices
	 
	4.2.1	 	The metering devices shall be installed and allocated in accordance with the Technical






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Power Purchase and Sale Contract for Technological Upgrading Project of Yuanping Hydropower Station





	 	 	Administration Code of Electric Power Metering (DL / T448-2000) and the Technical Code of
Gateway Metering Devices issued by Fujian Province Electric Power Co., Ltd.(trial version).
Before the metering devices start operation, the Parties hereto shall carry out the
completion acceptance of the metering devices according to the requirements of the Technical
Administration Code of Electric Power Metering (DL / T448-2000) and the Technical Code of
Gateway Metering Devices issued by Fujian Province Electric Power Co., Ltd. (trial version),
and without passing the completion acceptance, the metering devices can not be put into
operation. The wiring terminal, testing terminal on the secondary circuit of the metering
devices and the metering box/tank shall be ready for being sealed with stamps.






	4.2.2	 	The on-grid and off-grid electricity output of the Power Seller shall be measured by two
sets (one set as main meter and the other as assistant meter, both the main and assistant
meters shall be marked clearly and of the same type, specification and grade) of electronic
multifunctional power meters which are capable of bidirectional watt-hour (the accuracy level
is 0.2) metering function and four-quadrant var-hour (the accuracy level is 2.0) metering
function, and such power meters must be capable of the functions needed by the settlement ways
of the electricity fees. The metering devices shall be purchased, installed and owned by the
Power Seller. The Power Seller shall be responsible for the daily maintenance and other
management of the metering devices, and ensure that the metering devices will not suffer from
any damage and the seals and stamps are kept complete and intact.






	4.2.3	 	Before the metering devices are put into operation, the Power Seller shall file a written
application for completion acceptance according to the Administration Regulations on the
Operation of Grid Gateway Metering Devices of Fujian Province, together with the drawings and
other materials of the gateway metering devices. As for those metering devices which do not
conform to the technical codes, the Power Seller shall take active measures to upgrade the
technology. Prior to the acceptance of the upgrading, the Parties shall correct the errors of
the settled output according to relevant laws and







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Power Purchase and Sale Contract for Technological Upgrading Project of Yuanping Hydropower Station





	 	 	regulations of the State.






	4.2.4	 	The Power Seller shall install testing metering points, which shall be installed at the
bus-bar of the same voltage grade as the gateway metering devices. The installment and
allocation of the testing metering devices may refer to the technical requirements of gateway
metering devices.





4.3 Checking and Operational Management of Metering Devices





	4.3.1	 	The metering devices shall be checked and tested by a qualified metering testing agency, and
shall not be installed and put into operation until having been tested to be qualified. All
fees and expenses arising therefrom shall be borne by the Power Seller.






	4.3.2	 	The periodical checking (rotation), the on-site periodical testing and other operational
management of the metering devices shall be carried out by a qualified metering testing
agency which has been jointly entrusted by the Power Purchaser and the Power Seller. All fees
and expenses arising therefrom shall be borne by the Power Seller, and the Power Seller shall
assist in the operations and management of the metering devices.






	4.3.3	 	The periodical checking (rotation) and the on-site periodical testing of the metering
devices shall be carried out in accordance with relevant national and electric power industry
standards, codes and regulations.






	4.3.4	 	After having been checked or tested on site, the metering devices shall be sealed. Neither
the Power Purchaser nor the Power Seller may unseal the devices, change the devices, and its
interconnections or the components of the metering devices without the prior consent of the
other Party. In case of any metering inaccuracy caused by any Party’s unauthorized unsealing
or changing of the devices, its interconnections or components of the metering devices,
besides refunding or compensating relevant electricity fees, the defaulting Party shall be
responsible for all consequences and







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Power Purchase and Sale Contract for Technological Upgrading Project of Yuanping Hydropower Station





	 	 	liabilities arising therefrom.






	4.3.5	 	In order to prevent the metering inaccuracy caused by the break of PT/CT, the Power Seller
shall make at every month the balancing of the electricity output of the bus-bar on which the
metering devices are located.






	4.3.6	 	Any Party may require at any time to check or test the metering devices besides the
periodical testing and checking. All fees and expenses arising therefrom shall be borne by
the Party who proposes such checking or testing.





4.4 Meter Reading





	4.4.1	 	The meter reading day shall be set at the zero hour of the twenty-eighth day of each month.
The electricity output shall be subject to the data read from the energy meters, in the event
that the data recorded in the long-distance power energy billing system could satisfy the
requirements of settling the electricity fees, the electricity fees shall be settled according
to the data recorded in the long-distance power energy billing system. In case the data
recorded in the long-distance power energy billing system differs from the data read from the
energy meters, the data read from energy meters shall be adopted. All of the above-mentioned
data of electricity output shall be signed and confirmed on the spot, photographed and kept
for record by the Power Purchaser and the Power Seller.





4.5 Metering Deviation





	4.5.1	 	In the event that any Party detects the inaccuracy or malfunctions of the metering devices,
it shall immediately inform the other Party, and both Parties shall consult with each other
and determine the resolution as soon as possible. Both Parties may determine the amount of
electricity output during the malfunction or inaccuracy period according to other referential
data. In case of lacking enough referential data to determine the






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Power Purchase and Sale Contract for Technological Upgrading Project of Yuanping Hydropower Station





	 	 	electricity output during the malfunction or inaccuracy period, both Parties shall determine
the electricity output through further consultations.





CHAPTER V ELECTRICITY OUTPUT





	5.1	 	Annual Basic On-grid Electricity Output
	 
	 	 	Following the guidance of the annual electricity generation control plan, on the principle
of “Justice, Fairness and Publicity”, and considering the hydrological condition of the
Hydropower Station, the power supply and demand condition of the whole grid and the
conditions for the safe operation of the grid, etc., the Power Purchaser shall arrange in
detail the monthly electricity generation plan and relevant adjusted plans for the
Hydropower Station of the Power Seller.






	5.2	 	Principles of Allocating the Electricity Output between the New and Old Hydropower
Stations
	 
	 	 	On the premise of ensuring the safety of the grid and facilities and making the best use of
water resources, when arranging the electricity generation plans for the Technological
Upgrading Project of Yuanping Hydropower Station and the Old Yuanping Hydropower Station,
the electricity output generated by the Technological Upgrading Project of Yuanping
Hydropower Station and the Old Yuanping Hydropower Station shall be allocated in principle
in the proportion of 28:72 of the initially designed multi-year average electricity
generation output.





CHAPTER VI SETTLED ELECTRICITY TARIFF





	6.1	 	The on-grid electricity tariff for the units of the Power Seller: in the Power Seller’s
opinion, the on-grid electricity tariff of RMB 0.317/kwh (including value added tax at a






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Power Purchase and Sale Contract for Technological Upgrading Project of Yuanping Hydropower Station





	 	 	rate of 6%) shall be applied for approval, while in the Power Purchaser’s opinion, the
on-grid electricity tariff of RMB 0.26/kwh (including value added tax at a rate of 6%) shall
be applied for approval. The Power Seller and the Power Purchaser agree to temporarily settle
the on-grid electricity tariff at the price of RMB 0.26/kwh before obtaining the approval and
they will finally execute the electricity tariff approved by the competent price regulatory
authority.





CHAPTER VII PAYMENT AND SETTLEMENT FOR ELECTRICITY FEES





	7.1	 	All fees and expenses between both Parties shall be calculated and paid in RMB.
	 
	7.2	 	Calculation of the Electricity Output for Monthly Settlement
	 
	 	 	The electricity output shall be settled in accordance with the Supplemental Agreement on the
Gateway Metering Point Installment, Electricity Output Calculation and Line Loss Calculation
for the Openness of the Temporary Integrated Channel of Pingnan Rongping Supply District.
Details please refer to Appendix I.
	 
	7.3	 	Electricity Fees for On-grid Electricity Output






	7.3.1	 	The Power Purchaser shall pay the electricity fees to the Power Seller in an amount
calculated from the electricity output calculated according to Article 7.2 and the settled
electricity tariff provided in Chapter VI. The Power Seller and the Power Purchaser shall
confirm the amount of liquidated damages provided in the Grid Connection and Dispatching
Agreement every month.






	7.3.2	 	The Power Seller and the Power Purchaser shall complete the annual clearing of the
electricity fees before February 10 of the next year.




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Power Purchase and Sale Contract for Technological Upgrading Project of Yuanping Hydropower Station





	7.4	 	Payment of Electricity Fees
	 
	 	 	After having read the meters, the Power Seller shall accurately calculate the on-grid
electricity output and the electricity fees, and fill in the Electricity Output Settlement
Sheet and the Electricity Fees Settlement Sheet. After having been confirmed by the Power
Purchaser, the Power Seller shall deliver such Electricity Output Settlement Sheet and
Electricity Fees Settlement Sheet to the Power Purchaser on the same day or on the next
working day.
	 
	 	 	After having received the Electricity Output Settlement Sheet and the Electricity Fees
Settlement Sheet delivered by the Power Seller, the Power Purchaser shall check and confirm
them as soon as possible. In case of any dissidence, the Power Purchaser shall inform the
Power Seller within three (3) working days after the receipt of those settlement sheets.
After having been amended by the Parties through consultations, the Power Seller shall
deliver the amended Electricity Output Settlement Sheet and Electricity Fees Settlement
Sheet to the Power Purchaser. In the event that the Power Purchaser fails to inform the
Power Seller of any dissidence within three (3) working days after the receipt of the
settlement sheets, it shall be deemed as having been confirmed with no dissidence.
	 
	 	 	The Power Seller shall issue the special value added tax invoice ( the date indicated on the
invoice shall be within the month of settlement) based on the settlement sheets which have
been confirmed by the Power Purchaser, and deliver such invoice to the Power Purchaser. After
the receipt of the originals of correct Electricity Output Settlement Sheet, Electricity Fees
Settlement Sheet and special value added tax invoice, the Power Purchaser shall pay off the
electricity fees for that period to the Power Seller according to Article 4 of the document
with the number of Min Dian Jian Jia Cai [2008] No. 61.
	 
	7.5	 	Payment Method






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Power Purchase and Sale Contract for Technological Upgrading Project of Yuanping Hydropower Station





	 	 	The electricity fees paid by the Power Purchaser to the Power Seller shall be directly
remitted to the bank account indicated in the special value added tax invoice of the Power
Seller (or the bank account designated by the Power Seller in written form). The bank
account must be under the name of the Power Seller, otherwise the Power Purchaser shall be
entitled to refuse to pay for the electricity fees.
	 
	7.6	 	Materials and Records
	 
	 	 	The Power Seller and the Power Purchaser agree to keep their original materials and records
respectively so as to facilitate the reasonable checking of the statements and records or
the examination of the accuracy of calculations in accordance with this Contract.





CHAPTER VIII FORCE MAJEURE





	8.1	 	Force Majeure refers to the objective events which are unforeseen, unavoidable and
insurmountable. Such events shall include volcano eruptions, tornados, tsunamis, snowstorms,
mudslide, landslide, flood, fire, the earthquakes, typhoons, thunder and lightening, fog
flash, etc. beyond the designed standards, and nuclear radiation, wars, plagues and riots,
etc.






	8.2	 	In the event that any Party’s contractual obligations wholly or partially affected by the
occurrence of an event of Force Majeure , that Party may suspend the performance of its
contractual obligations provided that:






	 	(1)	 	the scope and period for the suspended performance shall not exceed the
reasonable requirements for eliminating the consequences of Force Majeure;




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Power Purchase and Sale Contract for Technological Upgrading Project of Yuanping Hydropower Station





	 	(2)	 	the Party affected by the Force Majeure shall continue to perform its other
obligations under this Contract which has not been affected by the Force Majeure;
	 
	 	(3)	 	In case the event of Force Majeure comes to an end, the Party claiming Force
Majeure shall resume the performance of this Contract as soon as possible.






	8.3	 	In the event that any Party is unable to perform this Contract due to Force Majeure, such Party shall inform the other Party in written form as soon as possible. Such written
notice shall indicate the date of the occurrence of Force Majeure, the anticipated
duration, the nature of the events, the impact on its performance of this Contract and the
measures it has taken to mitigate the impact of such Force Majeure events.
	 
	 	 	The Party affected by the Force Majeure shall furnish the other Party with an evidential
document within thirty (30) days commencing from the date when the Force Majeure event
occurs (in the event of communication interruption, from the restoration date of the
communication).
	 
	8.4	 	The Party affected by the Force Majeure shall take reasonable measures to mitigate the losses incurred by the other Party caused by Force Majeure. The Parties shall
immediately consult with each other to formulate and implement a remedy plan and
reasonable alternative measures to mitigate or eliminate the consequences of Force
Majeure.
	 
	 	 	In the event the Party affected by Force Majeure fails to use all its reasonable endeavors
to mitigate the consequences of Force Majeure, that Party shall be responsible for the
enlarged losses arising therefrom.
	 
	8.5	 	In the event that the Force Majeure has prevented a Party from performing its
obligations under this Contract for a continuous period of over sixty (60) days, the




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Power Purchase and Sale Contract for Technological Upgrading Project of Yuanping Hydropower Station





	 	 	Parties hereto shall consult with each other to determine the conditions for continuing the
performance of this Contract or to terminate this Contract. If the Parties hereto fail to
reach agreement concerning the conditions for continuing the performance of this Contract or
the termination of this Contract within one year after the occurrence of the Force Majeure,
any Party shall be entitled to terminate this Contract with a notice to the other Party,
unless otherwise provided herein.





CHAPTER IX LIABILITY FOR BREACH OF CONTRACT





	9.1	 	Principles for Handling Breach of Contract
	 
	9.1.1	 	Any Party’s non-performance of its obligations under this Contract or non-conforming
performance of its obligations shall be deemed as a breach of contract. The breaching Party
shall assume liabilities for breach of contract to the non-defaulting Party, such as to
continue the performance, take remedy measures or compensate for the losses, etc.
	 
	9.1.2	 	In case of any breach of contract, the non-defaulting Party shall immediately take proper
measures to prevent the enlargement of losses. In the event that such Party fails to take
proper measures resulting in the enlargement of losses, it shall not require the defaulting
Party to compensate the enlarged losses.
	 
	9.2	 	In the event that the Power Seller violates the provisions of Article 7.4 of this Contract
and fails to accurately and timely provide the invoices and materials for settlement, the
Power Purchaser may correspondingly postpone the deadline for the payment of electricity fees.
	 
	9.3	 	As for those funds which should have been paid by one Party to the other Party hereto as
provided in this Contract but have not been fully paid off, such Party shall pay liquidated
damages to the other Party in an amount of 0.3‰ of the unpaid portion per day.







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Power Purchase and Sale Contract for Technological Upgrading Project of Yuanping Hydropower Station





	9.4	 	In the event that any Party violates the provisions of this Contract and causes losses to
the other Party, such Party shall be responsible for the compensation for the losses incurred
by the other Party.
	 
	9.5	 	Both Parties agree that the liabilities for breach of contract which have not been mentioned
under this Contract shall refer to the relevant provisions of the Grid Connection and
Dispatching Agreement.





CHAPTER X EFFECTIVENESS AND VALID TERM OF THIS CONTRACT





	10.1	 	This Contract shall come into effect when it has been signed by the legal representatives or
authorized representatives of both Parties and affixed with the official stamps, and upon the
effectiveness of the Grid Connection and Dispatching Agreement.






	10.2	 	The valid term of this Contract shall be from December 28, 2008 to December 28, 2009.






	10.3	 	Within three (3) months before the expiration of this Contract, both Parties shall negotiate
with each other concerning the extension of this Contract. If both Parties all believe this
Contract needs no amendments, the valid term of this Contract shall be extended to the
expiration date of the operation period of the Hydropower Station. During such extension
period, in the event that any Party proposes a written objection to the other Party, this
Contract shall terminate automatically, and both Parties shall execute a new contract.





CHAPTER XI APPLICABLE LAW





	11.1	 	The establishment, effectiveness, interpretation, performance and dispute resolution shall
be governed by the laws of the People’s Republic of China.






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Power Purchase and Sale Contract for Technological Upgrading Project of Yuanping Hydropower Station




CHAPTER XII MODIFICATION, ASSIGNMENT AND TERMINATION

OF THIS CONTRACT





	12.1	 	Any modification, amendment or supplement to this Contract shall be conducted in written
form, and shall come into effect after having been signed by the authorized representatives
of both Parties.
	 
	12.2	 	Both Parties expressly agree that, without the other Party’s prior written consent, any of
them shall not be entitled to assign to any other party all or part of its rights or
obligations under this Contract.
	 
	12.3	 	Within the valid term of this Contract, both Parties agree to adjust or amend this Contract
accordingly under any of the following conditions:






	 	(1)	 	Relevant laws, regulations, rules and polices of the State have been amended;
	 
	 	(2)	 	Relevant rules, measures or regulations, etc. in relation to the power market are
promulgated and implemented by the State power regulatory agency.






	12.4	 	Termination of Contract
	 
	 	 	In the event that any of the following events occurred to any Party, the other Party shall be
entitled to terminate this Contract after having served a notice of termination:






	 	(1)	 	The Power Seller fails to deliver electricity safely as required by this
Contract for a continuous period of sixty (60) days; or the Power Purchaser fails to
receive the electricity normally as prescribed in this Contract for a continuous period
of sixty (60) days (excluding Force Majeure);






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Power Purchase and Sale Contract for Technological Upgrading Project of Yuanping Hydropower Station





	 	(2)	 	Any Party goes bankrupt, liquidated or the business license of any Party has been
revoked;
	 
	 	(3)	 	One Party is merged with the other Party or all or majority part of its assets
has been transferred to another entity, and the surviving enterprise cannot reasonably
perform its all obligations under this Contract.





CHAPTER XIII DISPUTE RESOLUTION





	13.1	 	Any dispute arising out of the performance of this Contract or any dispute in relation to
this Contract shall be firstly resolved by both Parties through consultations. If such dispute
cannot be resolved through consultations within thirty (30) days, the Parties shall submit
such dispute to the power regulatory authority of Fujian Province for mediation. In the event
that such dispute cannot be resolved through mediation within sixty (60) days, both Parties
agree to submit the disputes to the Arbitration Committee of Pingnan County for arbitration.
The arbitration award shall be final and binding on both Parties. During the arbitration
process, other than the disputed matter, both Parties hereto shall continue to perform this
Contract.





CHAPTER XIV MISCELLANEOUS





	14.1	 	Liability Demarcation
	 
	 	 	The liability demarcation point of 110kv Lijia Line shall refer to Appendix II for details
and the liability shall be demarcated as follows:






	 	(1)	 	The liability demarcation point: the property demarcation point shall be at one
meter away from the 1321 Switch on the line connecting Jiayang Substation 110kv bus-bar
jumper and Lijia Line;






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Power Purchase and Sale Contract for Technological Upgrading Project of Yuanping Hydropower Station





	 	(2)	 	The space electrics and communication equipments of 110kv Lijia Line which belong
to Party B shall be entrusted by Party B on its own expense to Party A for the operation
and maintenance management (the agreement entrusting Party A to manage the operation and
maintenance shall be signed separately);
	 
	 	(3)	 	The equipments one meter away from the space gantry of Lijia Line directing to
the grid shall be operated and maintained by Party B itself (the 110kv Lijia Line
operation demarcation agreement shall be signed separately).






	14.2	 	Confidentiality
	 
	 	 	The Parties warrant that they will keep confidential the materials and documents which are
procured from the other Party and cannot be procured through public channels. Without the
prior approval from the original provider of such materials and documents, the other Party
shall not disclose to any third party all or part of the materials and documents, unless
otherwise provided by laws.






	14.3	 	The Entire Agreement
	 
	 	 	This Contract and its appendices constitute the entire agreement of both Parties pertaining
to the transaction agreed upon in this Contract, and shall replace all previous discussions,
negotiations, agreements and contracts between both Parties to this Contract in respect of
the transaction of this Contract.






	14.4	 	Notification
	 
	 	 	Any notification, document or checked bills pertaining to this Contract shall be conducted
in written form. Documents sent by a registered letter, express mail or sent in person shall
be deemed as having been served after signed and confirmed with the receiver; if sent by
facsimile, the documents shall be deemed as having been served after those documents have
been received. All notifications, documents or checked bills






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Power Purchase and Sale Contract for Technological Upgrading Project of Yuanping Hydropower Station





	 	 	shall come into effect upon the service or receipt. All notifications, bills, information or
documents shall be sent to the following legal addresses and mail addresses provided in this
Contract, unless one Party issues a written notice to other Party to change its address.







Party A: Fujian Province Pingnan County Power Supply Co., Ltd.




	 	 	 
	Addressee:	 	Lin Xiong Que

	Telephone Number:	 	0593-3304003

	Facsimile Number:	 	0593-3302386

	Zip Code:	 	352300

	Mail Address:	 	No. 7, Huating Road, Gufeng Town, Pingnan County, Fujian Province

	

Party B: Pingnan County Yuanping Hydroelectric Co., Ltd.



	 
	Addressee:	 	John D. Kuhns

	Telephone Number:	 	0593-3325389

	Facsimile Number:	 	0593-3332698

	Zip Code:	 	352300

	Mail Address:	 	the 5th Floor, Cuibai Building, Gufeng Town, Pingnan County










14.5 Text






This Contract shall be signed in six (6) counterparts, with two (2) originals and four (4)
duplicates. Party A and Party B shall each hold one (1) original and two (2) duplicates.







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Power Purchase and Sale Contract for Technological Upgrading Project of Yuanping Hydropower Station




Party A: Fujian Province Pingnan County Power Supply Co., Ltd.




(Stamp)




Representative: Wei Nai Sheng




Party B: Pingnan County Yuanping Hydroelectric Co., Ltd.




(Stamp)




Representative: Lian Xin Chun




Signing Place and Date: Pingnan County, December 2008





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Power Purchase and Sale Contract for Technological Upgrading Project of Yuanping Hydropower Station




APPENDIX I: DIAGRAM FOR METERING POINTS













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Power Purchase and Sale Contract for Technological Upgrading Project of Yuanping Hydropower Station




APPENDIX II: DIAGRAM FOR LIABILITY DEMARCATION POINT




DIAGRAM FOR CONNECTION AND LIABILITY DEMARCATION OF JIAYANG SUBSTATION 110KV LIJIA LINE









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